Ottawa’s burgeoning high-tech sector and ongoing light-rail project will help a bit but not enough to reverse slow growth expected for the next year, according to a new report from the Ottawa Chamber of Commerce.
By Jacob Serebrin
Economic growth in the region is “expected to remain tepid throughout 2014,” according to the report, which was also authored by the Ontario Chamber of Commerce and Credit Unions of Ontario.
The region’s sluggish economic performance will largely be driven by federal government cutbacks, it said.
“Following a year of modest economic growth in 2012, the adverse effects of fiscal consolidation rippled through the regional economy through lower employment and a pullback in construction activity,” the report, which was released this week, reads.
The unemployment rate in the Ottawa region is expected to have risen in 2013 – to 6.5 per cent from 6.4 per cent – with the raw number of people employed in the region dropping to 687,000 from 697,600. That decrease of 1.5 per cent is largely due to a five per cent reduction in public sector employment.
The report predicts that employment rates will rise by one per cent next year, with 694,000 people employed in the region. While the unemployment rate is expected to remain flat through 2014, the report predicts that it will drop to 6.3 per cent by the end of 2015.
According to the report, growth in Ottawa’s information and communications technology sector is helping to cushion the blow of the public sector spending and employment reductions.
One major government project, the city’s $2.1 billion light rail expansion, is also expected to help stimulate private-sector non-residential construction investment by the end of the decade.
The unemployment rate in Ottawa, already one of the lowest in the province, is expected to remain below the provincial average.
Across Ontario, the average unemployment rate is expected to be 7.6 per cent for 2013, down from 7.8 in 2012. Central 1 Credit Union predicts that the provincial unemployment rate will drop to 6.8 per cent by the end of 2015.
Despite the recent drop in employment in Ottawa, the number of people with jobs in the region is above 2007 levels by nine per cent.
With the weak employment outlook, the city’s growth rate is expected to slow.
The report predicts Ottawa’s net migration will be 8,000 people for 2013, down by approximately 500 people from last year. That is expected to rise over the next two years, reaching 8,700 by 2015.
Even though the report predicts that “fewer Canadians (will be) drawn to the National Capital Region due to (a) lack of public-sector hiring,” Ottawa’s growth rate will still be one of the highest in the province, with only Toronto and Kitchener-Waterloo-Barrie outpacing it.
The report predicts that housing sales will be down for 2013, dropping four per cent to 16,500 from 17,184. The report predicts that this decline will continue next year – with sales dropping an additional 1.2 per cent – as interest rates are predicted to rise.
The report forecasts a 2.5 per cent increase in the number of homes sold, increasing that metric to 16,700.
With Ottawa’s housing prices among the highest in the province, the report predicts that they will rise “modestly” over the next two years and reach $341,000 in 2015. That’s up around 1.5 per cent from $336,000 in 2013.
“We are confidant Ottawa’s economy will rebound, particularly with the growth of the private sector,” said Ian Faris, president and CEO of the Ottawa Chamber of Commerce in a press release.